Will the Stock Market Rally This Fall?

September 5, 2010 · Filed Under Uncategorized 

Barrons

ONE THING SEEMS CLEAR AS THIS fitful season draws to a close: The recently range-bound stock market has the capacity to rally this fall. Whether it will is another matter.

It’s a lot to ask our politicians to get their act together, but a little resolution and clarity could go a long way. Policy uncertainty and collective breath-holding explain why the market typically muddles along before midterm elections, rising just an average 1.2% all year leading up to Election Day, notes Bespoke Investment Group. But once that’s over, stocks gain an average 3.2% for the rest of the year. Over the last 16 mid-term years, the market has never made a new low post Election Day, but it has climbed to new highs on seven occasions.

AS THE THREAT OF DEFLATION INCREASES, so will the government’s efforts to fight it. The Fed has always had the tool–printing presses–to stoke inflation, one reason why a dollar from 1913, the year the Fed was created, is worth just four cents today after adjusting for inflation. Should we worry now that the Fed has a motive?

http://www.smartmoney.com/investing/stocks/will-the-stock-market-rally-this-fall/

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